Domino’s Pizza Share Price Forecast October 2021 – Time to Buy DPZ?
Please note that we are not authorised to provide any investment advice. The content on this page is for information purposes only.
Shares of one of the largest pizza companies in the world, Domino’s Pizza (NYSE: DPZ) are in the red today, closing on $454.91 as of October 15th (19:59 EDT). The pizza company reported third-quarter results on Thursday, which indicated a healthy growth in revenue. However, this report also marked the end of its long-standing streak of consecutive quarters with same-store sales growth in the U.S.
Domino’s Pizza – Technical Analysis
According to the financial statement released by Domino’s Pizza, the market cap of the company is at $16.554 billion, with total assets worth $1.764 billion. Revenue for 2020 was at $4.12 billion with a profit margin of 11.93% compared to revenue of $3.62 billion in 2019.
Moving averages such as Exponential Moving Average (10)(475.38), Simple Moving Average (10)( 475.94), Exponential Moving Average (20)(482.48) and Simple Moving Average (20)(482.0) and Exponential Moving Average (30)(487.58) are indicating a selling action. Oscillators such as Relative Strength Index (14)(23.28), Stochastic %K (14, 3, 3)(30.11), Commodity Channel Index (20)(−244.35) and Average Directional Index (14)(29.89) are neutral.
67% of all retail investor accounts lose money when trading CFDs with this provider
Recent Developments
Domino’s has been experiencing a long-running streak of same-store sales growth since 2009. This ended however when the company reported a 1.9% year-over-year decrease in the metric in the third quarter. However, this was not surprising as the report compared with the robust growth the company achieved in the previous year. For instance, it achieved a third-quarter growth rate of 17.5% which was the highest in its history as a public company.
Another reason being attributed to the end of Domino’s streak is the widely reported labour shortages. This is due to its franchise business models, where individual franchises have discretions on what they pay to attract workers. While some franchisees increased incentives to attract labour, the majority operated fewer hours and/or reduced staffing levels. Domino’s international segment played a prominent role in the company, as evidenced by an 8.8% increase from countries such as India, Japan, China, and others. It opened 278 international outlets internationally in Q3 compared to just 45 domestically. The slight decline in sales does not threaten the company’s wider growth ambitions in the US. Management still expects to open around 8000 locations in the country, which will make it a 24% increase from today’s footprint.
Should You Buy DPZ Shares?
The decline in same-store sales growth has held back new store development with management citing difficulty finding sufficient staffing for new stores as well as for construction and other supply constraints as major factors. While the shares initially rose on the news, it has since fallen 4.5% since they released the earnings results for Q3.
It is clear that the market is in two minds about what to do with Domino’s after the earnings results were published. The positive aspect includes the increased profit margins in an otherwise tough business environment. On the other hand, the end of same-store sales growth in the United States isn’t good news for investors. As the pandemic disrupts all parts of the supply chain, rising costs for labour, freight and materials are filtering up.
Despite this, the company’s margins increased, achieving an earnings per share increase to $3.24 which is 30% up from the same quarter last year and well above Wall Street expectations. The higher share price could be justified as the company has increased its operating profit margin by nearly 1000 basis points over the last 10 years. Considering all of the above, you can easily pick up DBZ shares right now.
Buy DBZ Stock at eToro from just $50 Now!
